User:Khnassmacher/Party Finance in Germany

Party finance in Germany

A transparent flow of funds into party coffers has been stipulated by the German constitution (Grundgesetz) since 1949. However, only in 1967 legislative action provided a binding schedule for the reporting of party revenue and a procedure for the disclosure of major donations. Finally, in 1994 a general format for the comprehensive reporting of income and expenditure, debts and assets by each party organization was implemented. Ever since up to 35 different political parties file a financial report for the previous calendar year with the administration of the federal parliament (Präsident des Deutschen Bundestages). These annual reports cover the whole party organization (headquarters, regional branches and local chapters). They are tabled as parliamentary papers and published by the speaker of the Bundestag without meeting much interest among the general public or the media. Nonetheless important questions pertaining to the sources and the use of political funds as well as the financial situation of the parties can be answered by analyzing the data contained in these reports (Rechenschaftsberichte). A list of the reports is available from the Bundestag website. The reports can be downloaded from the website for parliamentary papers using the ID-number of the respective parliamentary paper (Bundestags-Drucksache) given in the aforementioned list. Here are some questions which can be answered by using that data:
 * How much money is raised and spent by each party operating in Germany?
 * What assets are at the disposal, which debts are on the books of German parties?
 * For which purposes did parties spend their funds during any calendar year since 1984?
 * From which itemzied sources did a specific party collect its revenue?
 * Who are the donors of major contributions (in excess of € 10,000) and how much did each donor give during a calendar year?

History
As a consequence of Fritz Thyssen's role in Adolf Hitler's rise to power in the early 1930s article 21 of the new post-war constitution, the Basic Law of the Federal Republic of Germany,  stipulated in 1949 that "political parties must disclose the sources of their funds to the general public." However, this remained inconsequential until the major parties felt the need to distribute public subsidies and the supreme court (i.e. the Federal Constitutional Court, Bundesverfassungsgericht) had ruled that such funds could only be allocated to cover "the necessary costs of an adequate election campaign." This situation triggered off federal legislation, the Political Parties Act of 1967. Among other subjects the act covered both, the rules for the transparency of party funding and those for the allocation of public subsidies. To this day article 21 of the constitution and parts IV and V of the Political Parties Act are the legal basis for the flow of funds thru party coffers, the German political finance regime.

In 1949 and in 1984 stipulations of the German Basic Law have been far ahead of other constitutions in modern democracies: In 1949 transparency of political funds was a completely new concept. In 1984 a constitutional amendment extended the provision of 1949 beyond sources of revenue to include expenses, debts and assets, too. Meanwhile § 24 of the Political Parties Act had established a practice to include all party units, not just federal headquarters, but also regional branches and local chapters.Thus today financial reports in Germany provide the only set of comprehensive data on party funds in any modern democracy. (A pinch of salt has to be added: Party reports do not include parliamentary groups, political foundations and individual candidates.)

Challenges to the current legislation and occasional scandals (e.g. the influence-seeking donations by Friedrich Karl Flick, the slush funds of chancellor Helmut Kohl and the funds anonymously held in a foreign bank by the Hessian CDU state party) have helped to improve the political finance regime up to a point that is equalled by few older democracies. Other donations, which led to controversy (like the biggest CDU contribution ever by Mr. and Mrs. Ehlerdings or donations to local SPD chapters in Cologne and Wuppertal), proved that the current rules can stand such challenges. Each party involved had to face sanctions by the enforcement agency, the speaker of the federal parliament, and by voters in elections that followed the specific scandal.

The supreme court ruling of 1958 ended a practice of tax benefits for plutocratic funding of parties by corporate donations. After a variety of circumventions, detours and leguislative experiments this principle was ultimately reinstated in 1992. In 1966 the supreme court tried to limit the amount of public funding. However, the initial concept failed because tying subsisies to campaign spending turned out to be not worling. A more recent ruling of 1992 allowed general subsidies but provided two kinds of limitation (a matching proviso and a maximum amount for direct state funding). The 1994 amendment to the Political Parties Act took care of all three provisions (relative maximum, absolute maximum for subsidies and no tax benefits for political contributions beyond € 3,000 per individual and calendar year). Finally $$ 23b, 25 and 31d of the Political Parties Act 2002 tried to perfect the rules.

Party Spending
During the 2006-09 election cycle the six parties represented in the federal pariliament (Bundestag) were able to dispose an aggregate budget of € 1.8 billion, an average of € 450 million per calendar year. As in other democracies spending in elections years is higher dthan in non-election years. In 2009 (an election year) the SPD raised € 173 million and the CDU € 163 million. For CSU, The Greens, FDP and The Left total revenues during the same year ranged between € 27 and 43 million. Put more generally this means that two major parties (CDU/CSU and SPD) can spend about € 200 million each whereas four minor parties have annual budgets of about € 40 million each.

The distribution of funds among the parties that elect federal MPs has stayed more or less stable for many years. Just one change is noteworthy: Whereas at the turn of the century the financial means of the major parties were more balanced, recently the governing CDU/CSU has re-established its traditional lead in financial terms, too. The total outlay for up to 30 other parties, which are not represented federally, is less than 10 percent of the overall party expenses or revenue. During the years 1984 to 1989 all German parties lumped together spent a total of € 5 to 7 per German citizen (person entitled to vote, voter on list). For 1991 to 2009 the aggregate per capita spending amounted to some € 5 to 10. Taking the rate of creeping inflation into account, German parties have had a hard time to keep up their spending levels.

Compared to other democracies the average outlay for all German parties belongs to a medium range among 18 nations. Parties in Austria, Israel, Italy, Japan and Mexico spend between three and two times the annual per capita amount of their German counterparts. Parties in Australia, Canada, Denmark, the Netherlands, the U.K. and the U.S. spend between half and a quarter of the German average. As far as reliable data are available this international rank order of party spending levels has been pretty stable during the second half of the 20th century,

When it comes to party spending everybody will think of election campaigns first, a European may also recall that parties employ staff and run offices "on the ground". Someone with an inside view of party activity may also think of conventions, meetings, mailings and other communication. In Germany campaigns at all levels of a federal system (national, state and municipal) are run by parties rather than candidates. Nonetheless over the whole election cycle campaign spending adds up to less than spending on staff, offices and internal communication. An important impact on this distribution among spending items is certainly caused by the fact that during a campaign for all state, the federal and the European parliaments public networks provide free airtime on radio and TV to all competing parties.

In 2009 salaries and releted benefits accounted for almost 23 per cent of the totsl expenses of the parties that elöected MÜs. About 15 per cent of the annual total expenses were the operational expenses for running a party organization on at least 3, sometimes 4 levels (national, regional, county and city). As a consequnce the party appartus devoured about 38 per cent of total expenses (even in an election year). Among the minor parties only the FDP (29 per cent) spent less, the Greens and the Left (41 per cent each) spend even beyond the average share - just to keep a party organization going.

German parties have estimated that less than 30 er cent of their total expenses are related to the use of media (billboards, advertisin in newspepers and magazines, advertising in privately owned networks) which is quite important for campaign purposes. Even in 2009, a year with two nationwide elections (for the European and the federal parliamnrs) the six Bundestag parties spent between 41 and 50 per cent of their total budgets on campaigning. Only the Bavarian wing of the Christian Democrats, the CSU, spent less (32 per cent of its annualö expenses).

Statutory or other cost controls for campaigns, such as a limited time period, a spendign limit or any other kind of limit, are unknown in Germany. The only limitation to party expenses is the ability to raise funds from private contributors. Due to a supreme court ruling (see above in ... History) public subsidies to a specific party may not exceed the total amount raised from signed-up members and other donors ("relative Obergrenze"). Thus a party that is unable to collect enough contributions from private sources will see ist public subsidy reduced automatically and be unable to incur all the expenses that it would like to. To this day only very small parties have been limited by this rule/ proviso.

Revenue
...

Any attempt to assess the public share of all party funds may start with the parties' annual reports. During the election cycle 2005-09 direct subsidies to party organizations amounted to an average of almost 29 per cent of total revenue. This has to be supplemented by an indirect source of public funding, the assessments of officeholders who transfer a proportion of their salaries and allowances to the party which nominated them. The total of such "party taxes" adds up to about 10 per cent of party income. This brings the public contribution to about 40 per cent of total party funds. Another source of indirect public funding results from the tax benefits thast donors of party contributions (including membership dues and "party taxes") up to € 3,300 per individual taxpayer and year casn claim against their income tax liability. An estimated loss in public tax revenue of € 100 million would add about 20 percentage points and increase the duirect and indirect cash subsidies from the public purse to party organizations in Germany to some 60 per cent of total party income.

Regulation
... to be completed

Books and Articles
(1) Adams, Karl-Heinz, Parteienfinanzierung in Deutschland: Entwicklung der Einnahmenstruzkturen politiascher Parteien oder eine Sittengeschichten über Parteien, Geld und Macht. Marburg: Tectum Verlag, 2005. (in German only) ISBN 3-8288-8804-6

(2) Boyken, Friedhelm: Die neue Parteienfinanzierung: Entscheidungsprozeßanalyse und Wirkungskontrolle. Baden-baden: Nomos Verlag, 1998. (in German only) ISBN 3-7890-5483-6

(3) von Arnim, Hans Herbert: Campaign and Party Finance in Germany. In: Gunlicks, Arthur B. (ed.), Camapign and Party Finance in North America and Western Europe, Boulder, CO: Westview Press, 1993, pp. 201-218        ISBN 0-8133-8290-4

(4) Gunlicks, Arthur B,, Campaign and Party Finanace in the West German "Party State". In: Reviev of Politics, vol. 50, Winter 1988, pp. 30-48.

(5) Gunlicks, Arthur B,, The Financing of German Political Parties. In: Merkl, Peter (ed.), The Federal Republic of Germany at Forty, New York, NY: University Press, 1989, pp. 228-248. ISBN 0-8147-5445-7

(6) Gunlicks, Arthur B,, The New German Party Finance Law. In. German Politics, vol. 4, January 1995, pp. 101-121.

(7) Koß, Michael, The politics of party funding: state funding to political parties and party competition in western Europe. Oxford: Oxford University Press, 2011. ISBN 0-19-957275-5

(8) Landfried, Christine, Political finance in West Germany. In: Alexander, Herbert E. and Shiratori, Rei (eds.), Comparative political finance among the democracies. Boulder, CO: Westview Press, 1994, pp. 133-144. ISBN 0-8133-8852-X

(9) Nassmacher, Karl-Heinz, Political finance in West Central Europe (Austria, Germany, Switzerland). In: Nassmacher, Karl-Heinz (ed.), Foundations for democracy: Essyas in honor of Herbert E. Alexander. Baden-baden: Nomos Verlag, 2001, pp.92-111. ISBN 3-7890-7340-7

(10) Pinto-Duschinsky, Michael, The Party Foundations and Political Finance in Germany. In: Seidle, Leslie F. (ed.), Comparative Issues in Party and Election Finance. Toronto, ON: Dundurn Press, 1991, pp. 179-250. ISBN1-55002-100-1